The Abu Huli checkpoint, which divides northern and southern Gaza, was closed on Tuesday morning with cement blocks and sand barricades.
In the south, hundreds of passengers were stranded overnight at the Rafah crossing on the border with Egypt, unable to return to Gaza or continue onward to other destinations.
Witness Mai al-Farra said Israeli troops also fired randomly throughout the night, and launched several tear-gas canisters and stun grenades at the peaceful crowd, before telling the weary passengers to "go home, we are not going to let any of you through".
One of the tear-gas canisters was launched directly at a taxi, shattering its glass and injuring the passengers inside, witnesses said.
Taxi driver Abu Jazar said one man fell unconscious from the tear gas. No ambulances were allowed through.
Palestinian security and medical sources said on Monday that the Israeli army has used a new kind of tear gas against protesters.
Palestinian ambulances have
been prevented from crossing
The sources said that the gas had caused suffocation, unconsciousness, spasms, vomiting and other side effects, similar to those seen at the Abu Huli checkpoint.
Al-Farra said whenever young Palestinians attempted to cover the tear-gas canisters to prevent inhalation, Israeli troops fired others in their place.
Later on Monday afternoon, 40 Palestinians who attempted to cross the checkpoint by foot peacefully with their hands raised, were shot at by Israeli troops.
A two-year old infant and a 65-year old man were among the injured, according to ambulance driver Muhammad Abu Samra.
Hundreds of cars have been lined up at the checkpoint since 14:00 on Monday afternoon.
Passengers who spent the night in their taxis and on the dirt roads said there were no toilets or food available for their children.
"What are we - a bunch of animals for them to treat us this way?" said al-Farra.
Israeli army spokesperson Eytan Arusi told Aljazeera.net that the checkpoint had been "closed down for security reasons until further notice".